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A STUDY ON EFFECTIVENESS OF INVENTORY

MANAGEMENT AND CONTROL OF JANATHA TILE WORKS


LTD. MOONNIYUR, MALAPPURAM

PROJECT REPORT

Submitted by

MOHAMMED HISHAM V P
(KVAQBBA105)

Under the guidance of

Ms. APARNA
(Lecturer in department of commerce and management studies)

For the partial fulfillment of the requirement for the degree of


Bachelor of Business Administration

UNIVERSITY OF CALICUT

CO OPERATIVE COLLEGE PARAPPANANGADI,


MALAPPURAM 676303
2016-2019

1
DECLARATION
I, the undersigned MOHAMMED HISHAM V P student of sixth semester, co
operative college parappanangadi, here declare that the project work presented in this
report is my own work and has been carried out under the supervision of Ms. APARNA.P
lecturer in co operative college parappanangadi.

Place : Name :

Date : Reg. No. :

Signature :

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ACKNOWLEDGEMENT

I wish to express my sincere thanks to Mr. SURENDRAN principal of co operative


college, parappanangadi providing me all the necessary facilities.

I have great pleasure in recording heartily feelings of respect and gratitude towards
Mr. SHASI , head of department of commerce and management studies.

Words fail to express my sincere thanks to Ms. APARNA lecturer in department of


commerce and management studies. I am extremely grateful and indebted to them for
expert, sincere and valuable guidance and encouragement extended to me.

I am thankful to and fortunate enough to get constant support and guidance from all
teaching staffs of department of commerce and management studies, which helped as in
successfully completing our project work.

I would like to acknowledge my deep sense of gratitude towards the management and
staff of JANATHA TILE WORKS LTD, MOONNIYUR for permitting me to do the project in
their organization. I express my sincere gratitude towards the manager of Janatha Tile
Works Ltd, granting me the permission, better advice, gratitude and co operation.

I express thanks to my classmates and friends who were helpful to me in the work. I
wish to thank all my family members for the moral support provided to me during my
studies.

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TABLE OF CONTENT

SL. NO. CONTENT PAGE NO.

introduction 7-9

Objectives of the study 10


CHAPTER 1
Importance of the study 11

Limitations of the study 12

Statement of the problem 13

Research methodology 14

CHAPTER 2 Review of literature 15-25

CHAPTER 3 Industry and company profile 26-35

CHAPTER 4 Data analysis and interpretation 36-47

findings 48-50

CHAPTER 5 suggestions 51

conclusion 52

bibliograghy 53-54

4
LIST OF TABLES

SL. NO. NAME OF TABLE PAGE NO.

4.1 Table showing stock turnover ratio 37

4.2 Table showing inventory conversion period 39

4.3 Table showing amount of raw materials 41

4.4 Table showing amount of stock in process 42

4.5 Table showing amount of finished goods 44

4.6 Table showing amount of stores and spares 45

5
LIST OF CHARTS

SL. NO. NAME OF CHART PAGE NO.

4.1 Stock/inventory turn over ratio 38

4.2 inventory conversion period 40

4.3 Amount of raw material 41

4.4 Amount of stock in process 43

4.5 Amount of finished goods 44

4.6 Amount of stores and spares 46

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CHAPTER 1

INTRODUCTION

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1.1 INTRODUCTION

Inventory management and control is vitally important to almost every type of business
whether product or servise oriented. Inventory is an idle stock of physical goods that
contain economic value and are held in various forms by an organization, in its custody
awaiting packing, processing, transformation, use or sale in a future point of time. Any or
which is into production, trading, sale and service of a product will necessarily hold stock of
various physical resources to aid in future consumption and sale, while inventory is a
necessary evil of any such business. It may be noted that the organization hold inventories
for various reasons, which speculative purposes, functional purposes, physical necessities
etc.

A term inventory refers to the stock of files of the products a firm is offering
for sale and the components that make up the product. In other words, inventory
composed of assets that will showed in future in the normal course of the business
operations. The assets which firms stores as inventory in anticipation of need are:-

 raw material
 work in process(semi finished goods)
 finished goods

The raw material inventory contain items that are purchased by the firm
from other and are converted into finished goods through the manufacturing
process. They are an important input of the final products. The working process
inventory consists of items currently being used in the production process.

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They are normally semi finished goods that are at various stages of
production in a multi stage production process. A finished goods represented final or
completed product which are available for sale. The inventory of such goods consist of
items that have been produced but are yet be sold.

Inventory as a current asset, different from other current assets, because


only financial managers are not involved. Rather all the functional area finance, marketing,
production and purchasing are involved. The views concerning the appropriate level of
inventory would differ among the different functional areas.

Inventory is always dynamic. Inventory management require constant and


careful evaluation of external and internal factors and control through planning and review.
Managing raw material inventory is far more complicated than managing finished goods
inventory. This involves analyzing and coordinating delivery capacity, lead times and
delivery schedules of all raw material supplies, coupled with the logistical processes and
transit timelines involved in transportation and ware housing of raw material before they
are ready to be supplied to the production shop floor.

Inventory management is a very important function that determines the health of supply
chain as well as the impact the financial health of the balance sheet. Every organization
constantly strive to maintain optimum inventory to be able to meet its requirements and
avoid over or under inventory that can impact the financial figures.

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1.2 OBJECTIVE OF THE STUDY

 To analyze the efficiency of inventory management of the organization.

 To identify how much in inventory must be store for smooth functioning of the
organization.

 To identify how much inventory should be held as raw material, semi finished or
finished goods.

 To identify optimum level of inventory which minimizes the cost.

 To identify the most valued inventory item which is used for production.

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1.3 IMPORTANCE OF THE STUDY

Every organization needs inventory for a smooth running of its activities. It


serve as a link between production and distribution process. Inventory management is very
important function, that determines the health of the supply chain as well as the impacts of
financial health of the balance sheet. Every organization constantly strive to maintain
optimum inventory to be able to meet its requirements and avoid over or under inventory.
The purpose of invemtory management is to ensure availability of materials in sufficient
quantity as and when required and also to minimize investment in inventories. So in order
to understand the nature and effectiveness of inventory management and its control of the
organization, I took this inventory management and controls as a topic for my project.

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1.4 LIMITATIONS OF THE STUDY

 The study has been undertaken in a limited period of time.

 Lack of some information very few techniques are used for analysis.

 The analysis mainly based on annual reports maintained by the firm, it is in historical
nature.

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1.5 STATEMENT OF THE PROBLEM

Inventory management is a very important function of all organizations. Every


organization has to maintain optimum level of inventory to meet its requirements. So the
study about inventory management and control are so important and vital. It enables the
business to meet or exceed expectations of the customers by making the products readily
available. The ultimate aim of this study is to understand the role of inventory management
for the smooth running of the organization.

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1.6 RESEARCH METHODOLOGY

1.6.1 Research Design


Research design selected for this study is descriptive cum analytical method.
Descriptive research is designed to gather descriptive information. It provides information
for formulating complex studies. The data needed for study are collected through
observation, interview and questionnaire design.

1.6.2 Primary Data


The primary data collected through personal interview and discussion with the
manager of the company.

1.6.3 Secondary Data


From this study, secondary data has been collected from books, websites, and from
the annual reports maintained by the company for the past 5 years.

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CHAPTER – 2

REVIEW OF LITERATURE

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THEORETICAL FRAMEWORK

Meaning of inventory
Inventory is a list of goods and materials or those goods and materials themselves,
held available in stock by a business. It is also used for a list of the contents of a house hold
and for a list for testamentary purpose of the possessions of someone who has died. In
accounting inventory is considered an asset.

Types of inventory
Inventories play a major role in a business or depending on nature of the business.
The inventories may be classified as under.

Raw material
Materials and components scheduled for use In making a product. These are the
basic inputs, which are converted into finished products through manufacturing process.
Raw materials inventories are those units which have been purchased and stored for future
production.

Work in process/progress
Materials and components that have begun their transformation to finished goods.
Materials issued to the stop floor which have not yet become finished products, they are
value added materials to the extent of labour cost incurred.

Finished goods
A finished goods is a completed part that is ready for a customer order. These goods
have been inspected and have passed final inspection requirements, so that they can be
transferred out of work in process and into finished goods inventory. From this point
finished goods can be sold directly to their final user, sold to retailer, sold to wholesalers,
sent to distribution centers or held in anticipation of a customer order.

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MOTIVES FOR HOLDING INVENTORY

1. Transaction motive
Every firm has to maintain some level of inventory to meet the day to day
requirements of sales, production process, customer demand etc.

2. Production motive
A firm should keep some inventory for unforeseen circumstances also for eg: there
may be a strike in the factory and the production process may halt.

3. Speculative motive
The firm may keep some inventory in order to capitalize an opportunity of making
profit.

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INVENTORY MANAGEMENT

Inventory management simply refers to management of inventory. Inventory


management may be defined as the overall way a company manages its inventory and uses
its control system to manage the benefits of carrying inventory against the cost. Inventory
management involves setting of inventory levels, so as to maximize the benefits while
minimizing the cost of holding inventory.

Inventory managements involves :-

 Inventory management is the active control program which allow the management
of sales, purchases and payment.
 System and processes that identify inventory requirements, set targets, provide
replenishment techniques and report actual and projected inventory status.
 Inventory management helps providing a good understanding ground and the
capacity to control financial costs.
 The Inventory management will control operating cost and provide better
understanding.

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OPERATING CYCLE OF INVENTORY MANAGEMENT

Operating cycle is the duration of time within which one cycle of business operation
is completed. Business operation involves a number of stages, it begins with cash out flow
and it passes through various stages such as work in process, finished goods, credit sales,
book debts or bills receivables etc.

debtor's cash

raw
sales
material

finished work in
goods progress

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ESSENTIALS OF INVENTORY CONTROL

The important requirements of inventory control are:-

 A firm needs inventory control system to effectively manage its inventory


 Proper classification of materials with codes, materials standardization and
simplification.
 The operation of a system of internal check to ensure that all transactions involving
material and requirements are checked by properly authorized and independent
persons.
 A suitable method of valuation of materials is essential because it affects the cost of
jobs and the value of closing stock of material.

OBJECTIVES OF INVENTORY CONTROL

The main objectives of inventory control are:-

1. To maintain a large size of inventory for efficient and smooth production and sales
operation
2. To maintain a minimum investment in inventories to maximize profitability
3. To ensure a continuous supply of raw materials to facilitate uninterrupted
production.
4. To maintain sufficient stock of raw materials in periods of short supply and anticipate
price change.
5. Maintain sufficient finished goods inventory for smooth sales operation and efficient
customer services.
6. Minimize the carrying cost and time.
7. Control investment in inventories and keep it an optimum level.

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ADVANTAGES OF INVENTORY CONTROL

The following are suggested advantages:-

1. Eliminate wastage in use of material.


2. It reduces the risk of loss from fraud and theft.
3. It helps in keeping perpetual inventory and other records to facilitate the preparation
of accurate material report management
4. To reduce the capital tied up in inventories
5. It reduces cost of storage.

DISADVANTAGES OF INVENTORY CONTROL

Every firm has to maintain optimal level of inventories. It not the following will be
the result in form of losses.

1. Opportunity cost: firm has to maintain inventory for that some investment is needed
it is known as opportunity cost and handle the investment in inventory are more the
funds are blocks up with inventory.
2. Excessive inventories: it will lead to firm losses due to excessive carrying costs the
risk of liquidity. It is also referred as danger level.
3. Inadequate inventor: it is another danger which results is production hols-up and
failure to meet delivery commitments. In adequate raw materials work in process
inventors will results in frequent production interruptions. It finished goods are not
sufficient customers may shift to competitors.
4. Danger due to physical decoration: it is one of the reason with the inventories due
to maintaining stocks at high levels they will be deteriorated due to passage of time,
sometimes due to mishandling or improper storage facilities.

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COST INVOLVED INVENTORY

1. Ordering cost
These are cost of placing order. The costs upon the number of orders and not
on quantity of inventory ordered. Ordering cost includes cost of preparation of
purchase order, cost of receiving goods, transport cost, documentation processing
costs, etc. these are also known as set up cost or acquisition cost.

2. Carrying cost
These are the cost incurred in keeping or holding inventory. These includes
handling cost, storage cost(rent), insurance, security cost, cost of pilferage and
damage, depreciation, opportunity cost of money tied up inventory(interest) etc.

3. Stock out cost


A stock out is a situation when the firm is not having items in the store but
there is a demand for sale. It may loss sales, it may loss goodwill and profit. It is also
known as shortage cost.

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REVIEW OF LITERATURE

S.M Disney and D.R Towill (2003):- in their research “the effect of vendor managed
inventory (VMI) dynamics on the bullwhip effect in supply chain” compares the expected
performance of a vendor managed inventory (VMI) supply chain with a traditional “serial
linked” supply chain. The emphasis of this investigation is the impact these two alternative
structures have on the “blue whip effect” generated in the supply chain. We pay particular
attention to the manufactures production ordering activities via a simulation model based
on difference equation. VMI is thereby shown to be significantly better at responding to
volatile changes in demand such as those due to discounted ordering or price variations.
Inventory recovery as measured by the integral of time * absolute error. Performance
metric is also substantially improved via VMI. Noise band width, that is a measure of a
capacity requirements, is then used to estimate the order rate variance in response to
random customer demand. Finally the paper simulates theVMI and traditional supply chain
response to a representative retail sales pattern. The result are in accordance with “rich
picture” performance predictions made from deterministic inputs.

Julias A Sharma, Dinesh K Sharma, HariP(2004):- they discussed supply chain which
involves the configuration, coordination and improvement of sequentially related set of
operations in establishments, integrates technology and human resource capacity for
optimal management of operation to reduce inventory requirements and provide support
to enterprise in pursuance of a competitive advantage in the market place. This paper
addresses the structures of supply chain management(SCM) and the activities involve in
SCM decisions that help promote profound improvement in efficiency and effectiveness in
business operations. In broader context, the paper examines the types of activities involved
in SCM.

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Ricard Pibernik (2004):- In this study “advanced available to promise: classification, selected
methods and requirements for operations and inventory management” gives the
theoretical frame work for the development of models and algorithms supporting order
quantity and due date quoting. At first , alternative generic AATP systems will be identified
on the basis of relevant classification criteria. Based upon this classification, the AATP
planning mechanisms will be detailed for two generic AATP types. On the basis of the
introduced AATP types and the description of selected models we finally derive
requirements, which operations and inventory management have to meet in ordered to
ensure a successful application of AATP

B. J Grablowsky, (2005):- in this paper “financial management of inventory” surveyed small


business inventory management practices and compared with techniques commonly
employed by large corporations. It appears that smaller firms rely on simple controls. Large
businesses rely more on quantitative techniques. Such as EOQ and linear programming, to
provide additional information for decision making, while small firms are more likely to use
management judgement without the quantitative backup of those small firms which did not
use quantitative methods for determining inventory order and stock levels, the most
common qualitative methods were past experience and executive judgement.

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Vikram Tiwari, Srinagesh Gavimeni (2007):- in their article “asp, the art and science of
practice; recoupling inventory control research and practice; guide lines for achieving
synergy” focused on the widening disconnect between inventory control research and
practice, people debate the value of incremental theory building. While practitioners make
decisions in a complex and uncoordinated environment, researchers often adopt a
simplistic environment for the sake of rigorous analysis. The stake holders mismatched
objectives and motivations may cause this lack of synergy. Controlling and reducing this
disconnect would benefit both practitioners and researchers. The existing empirical analysis
of companies business improvements based on academic inventory management theories
is inconclusive. Even so, some businesses have successfully implemented theory; however
in most cases, they have greatly modified the inventory models developed by academics.

Brent.D. Williams and Travis Tokar (2008):- in their study “a review of inventory
management research in major logistics journals: themes and future directions” discussed
that logistic researchers have focused considerable attention on integrating traditional
logistics decisions, such as transportation and ware housing, with inventory management
decisions, using traditional inventory control models. Logistic researchers have more
recently focused on examining inventory management through collaborative models.

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CHAPTER 3
INDUSTRY AND COMPANY PROFILE

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INDUSTRY PROFILE

In south India the German mission had played a vital role in developing the
roofing tile industry. In the present scenario ,roofing tile have become a vital
part of house construction activity. By end of sixties most of the houses used

roofing tiles of their houses. It is the decade of the country showed more interest
to concrete roofs. Later tile market was down. However it has again picked up
business as decorative roofing tiles, walls and floor tiles are in great demand
now. The demand has tile is thus improving when compared to previous years.
However some of the tiles manufacturing company have reached saturation
stage of sales. They have to make changes in their overall system of production and
distribution to enhance their sales.

History and growth of tile industry

Tiles are thin, flat slab or block used structurally or deceptively in building.
Traditional tile have been made of glazed or unglazed fired clay, but modern
tiles are also made of plastic, glass, asphalt, or asbestos cement. The tile
industry forms part of the ceramic group. The tile industry forms part of the
ceramic group. The terms ceramic is derived from the Greek word `Keramikod'
which itself owes its origin to Sanskrit. This term is also related to 'pottery'
which is `pidhory' in Sanskrit denoting vessels made of clay. Clay article used for
building construction and civil engineering are generally grouped into structural
clay products in which the bricks and tiles industry may also be included. The
origin of tiles is form the desire of mankind to have a permanent roof. Indians
knew the practice of making tiles from very ancient times but as an organised
industry , it is know only from the past 20th century in our country. Before the advent
of modern tiles the traditional 'forte' made by kulalas in their kulachakra were
popular.

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History

The stage of the modern factory system was setup by the missionaries and foreign
capitalist. The royal charter given system was setup by the queen of England in 1600 was
revised in 1833 by the British parliament to include provisions to grant entry of all
Europeans into India. The next year the German Basel mission sent three of its pioneer and
yang missionaries to India. Karl George Andreas's plebes a Basel missionary came into
India as a printer in 1850. Having found suitability to the clay deposits on the west coast
for tile manufacture, they went back to Germany to learn ceramics and type foundry and
to introduce them to India. He again came to India in 1863 and started the first tile factory
at Jeppo near Mangalore in 1865.

The German mission hers from Basel started a tile manufacturing company in
Mangalore in 1875 which was considered as the first mechanized tile and other clay
products are carried on handily crafts. The use of machines led to the large scale production
and expansion of tile industry.

The Industry in Kerala

In India Mangalore pattern Roofing Tile Factory was first established in 1965 by
Basel Mission (German machineries). They setup the first tile factory in Kerala in the year
1844 and it was named "Common Wealth Trust Ltd" or "COMTRUST". Hundreds of
factories came into existence in south west coast of the country since the industry has
completed approximately one and quarter century of useful service to the country. The
numerous rivers and backwaters of Kerala provided cheap transport and so it is quite
naturel that a number of factoriesCalicut, Kollam, Trissur, Alappuzha and Kannur. The
abundance of clay is another factor which contributed for the expansion of tile industry.
Now a day's most of the unit has become sick. Entire industry is facing a recession. The
fall in demand and rising cost of production are the major causes of

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recession. A recent study revealed that around 200 tile units are becoming sick every year.
Many of the units are strubbling for their existence. The First Tile Factory in Kerala was
started in 1873 at Calicut by Basel Mission the pioneer tile manufacturing in India. In olden
days these industries was exporting their products to Singapore, Burma, Africa, countries and
Arabian countries. The tile industry in Kerala was highly labour intensive. It provided
employment opportunities to around 100000 peoples directly and the same indirectly in
the state of Kerala. The installed capacity is 100 criers tiles annum. Kerala enjoys an
important position in the manufacturing. There was a good demand for local as well as
export market.

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2.2 COMPANY PROFILE

The Janatha Tile Works Ltd situated on the bank of Kadalundipuzha


riverMoonniyurpanchayath at Malappuram District in Kerala. It is a small scale industry owned
by its works.

The firm established in the year 1948 as a partnership firm owned and
managed by MR.MK Haji and his partners. M.K Haji is the found of Janatha Tile
Works. In the year 1953 the company was registered under the Indian companies Act,
1913 in the name of Mamburam Clay Tile Works Pvt Ltd. There after it was sold to MR
NatrajaMuthaliar, Bangalore. Later it was managed and owned by its workers and
registered as a public Ltd Company and the Companies Act 1956, in the year

The authorised share capital of the company is 35,00,000/— made up of 35,000 equity
shares of 100/— each. Out of these shares 21619 shares were issued to the public. A
major part of the shares are held by the company workers. Today there are about 94
permanent workers and 14 temporary workers directly working in the company. The
company is well established and has history of nearly 62 years.

The company mainly deals with clay tiles. Clay tile are one of the most
distinctive and decorative historic roofing materials because of their great variety of
shares colors, profile, pattern, and textures. Traditionally clay tiles were formed by hand
, and later by machine extrusion on of natural clay, textured or glazed with colour and
tired in high temperature kilns. The unique visual availability of clay tile roof often makes it
a prominent feature.

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The promoters of the company were:-

1. C. Yangamoorthy Namboodiri pad.

2. V. K.Kandakuttv.

3. A.Balan Nair.

4. T.Balakrishnan.

5. C.Vasu.

6. K.Kunchappu.

7. P.V Balan Nair

Board of Directors

The operations and the activities of the company managed and controlled by
Board of Directors, who are selected by the share holders.
Mr.KarimbilVelayudhan was the present Chairman of the company. Present members of
Board of Directors are:-

 Mr. Karimbil Velayudhan (Chairman)


 Mr. C Venugopalan (Director)
 Mr. C.P Musthafa (Director)
 Mr. Achuthan.P.K (Director)
 Mr. K.P BabuRajan (Director)
 Mr. k Manoj Kumar (Director)
 Mr. Dharmarajan (Director)

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CAPACITY OF THE UNIT AND ITS MACHINERY

The total capacity of the machinery is 140 lakh per annum. The machinery has been
set to extract suitable grades of products. The important machineries are using in this
factory are De-Airing pug mill, pressing machine , primary and Final Roller sets and
Mixture. All these are German technology.

WELL ESTABLISHED BRAND NAME

Janatha Tile Works Ltd is a well established company and has been existence for
the last 67 years. The company is marketing their product under the brand name of "GINI".

CORPORATE MISSION

"The Janatha Tile Works Ltd believes in growth through quality, innovation and
customer satisfaction. The corporate mission of Janatha Tile Works Ltd to ach ieve and
maintain customer satisfaction through sustained quality in the products and services at
all times."

VALUATION OF INVENTORY

Inventories are valued at cost or net realisable value whichever is lower. Items of
inventories are measured at lower cost or net realisable value after providing for
obsolescence, if any. Cost of inventory comprises of cost of purchase„ cost of conversion
& other assets incurred in bringing them to their respective present location &
condition. Cost of raw material, process chemicals, packing materials, trading & other
products are determined on FIFO basis.

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OBJECTIVES OF JANATHA TILE WORKS LTD

 To manufacture and deal in article of clay and particularly roofing and flooring tiles,
burnt bricks, fire bricks, hurides, hollow blocks and other products of clay required for
building construction and house hold utility.
 To convert the whole or any part of the building new chimney and other properties
belonging to the to the company for any purpose and in any manner and to make
such alteration and additions that may advantages for fly purpose of caring on the
business of the company.
 To acquire by purchase, lease or otherwise any land, clay yards and forests from
which the raw material requires by the company may be obtained.
 To purchase clay, firewood or any other goods and merchandise for carrying on the
business of the company.
 To own by purchase or otherwise, Motor Lorries, Motor vans other kinds of
vehicles to transport the raw materials and product of the company by land or
by water.
 To buy, manufacture and sell all kinds of materials required for a tile factory and to
turn the company's property to any purpose likely to benefit the company.

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ORGANISATIONAL OUTLAY

Name : JANATHA TILE WORKS LTD

Situauted : parakkadav, moonniyoor

South malappuram dist. Kerala

Industrial category : manufacturing of high class roofing tiles

Status : small scale unit

Year of starting : 1948

Managing body : The organizational works

Employees : 108 workers

Installed capacity : 13000/per day

Input used : clay and plastic mud

Working time : 8 am to 5 pm

Company objective : manufacturing of high class roofing tile and

other commodities

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PRODUCTS PROFILE

 Roofing tiles

Quality roofing tiles, for all seasons protect from heavy rain, arrest extreme heat
and light, water light, dust proof, deep grooves, elegant and cheap for our R.C.C, lay tiles on
reapers to keep the house cool day and night.

 Ridges

 Wire Cut Bricks

 Hollow Bricks

 Hourdi blocks

For partitioning, compound walls, Ceiling and Sanitary Slabs.

 Sky lights

For brightness in the darkness, useful to roofs of kitchens, passages etc.

 Potteries

Hanging type flower pots for flowery, gardens hanging round the bungalow.

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CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

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STOCK TURNOVER RATIO (STR)

STR measures the operating efficiency of the enterprise and shows the number
oftimes the goods are turned over during a particular period. This ratio shows whether the
investment in stock is efficiently used or not. It can be calculated by;

STR = Net sales/Avg stock

STR shows quickly the goods are sold. A high ratio is desirable from the point of
view of liquidity. A low ratio is an indication that stock is slow moving.

4.1 TABLE SHOWING STOCKTURN OVER RATIO

Financial year Net sales Average stock STR

2014 3,49,50,622 63,58,170 5.49

2015 4,61,67,273 78,67,917 5.86

2016 4,98,87,442 75,77,914 6.58

2017 3,95,19,890 5,268,706 7.50

2018 3,63,28,086 37,08,142 9.79

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STOCK TURNOVER RATIO
2030

2025

2020

STR
2015

2010

2005
1 2 3 4 5

Interpretation
The STR for the year 2014 is 5.49 times, means the firm can convert their stock into
sales in 5.49 times during the year. During 2015 STR is 5.86 times and it was increased in the
following years as 6.58, 7.50 and 9.79 times in 2016, 2017 and 2018 respectively.

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INVENTORY CONVERSION PERIOD (ICP)

This ratio is called stock velocity, because it shows the inventory holding
period. It is calculated by using the formula;

ICP = months or days in a year/STR

4.2 TABLE SHOWING INVENTORY CONVERSIOPN PERIOD

Financial year Months in a year STR ICP in months

2014 12 5.49 2.18

2015 12 5.86 2.04

2016 12 6.58 1.82

2017 12 7.50 1.60

2018 12 9.79 1.22

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ICP in months

2.5

1.5

ICP in months
1

0.5

0
1 2 3 4 5

Interpretation
From the analysis it is found that the inventory conversion period for the year 2018
is 1.22 months. During 2014 ICP is 2.18 months and it was 2.04, 1.82, 1.60, 1.22 months
respectively in 2015, 2016, 2017 and 2018. It reveals that the company have sufficient
conversion period.

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4.3 TABLE SHOWING AMOUNT OF RAW MATERIALS

Financial year Amount of raw material

2014 63,79,116

2015 93,26,838

2016 56,73,075

2017 48,24,638

2018 91,56,507

Amount of raw material


10000000

9000000

8000000

7000000

6000000

5000000
Amount of raw material
4000000

3000000

2000000

1000000

0
1 2 3 4 5

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Interpretation
The above graph shows the amount of raw materials at cost. In 2014 the cost of material
is Rs.63,79,116, and it is increased in the year of 2015 Rs.93,26,838, then it decreased in the
year of 2016 and 2017 it was Rs. 56,73,075 and Rs. 48,24,638 respectively. And in 2018 it is
increased to Rs. 91,56,507

4.4 TABLE SHOWING AMOUNT OF STOCK IN PROCESS

Financial Year Amount Of Stock In Process

2014 18,65,965

2015 26,97,037

2016 37,31,149

2017 65,50,940

2018 34,44,733

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Amount of stock in process
7000000

6000000

5000000

4000000
Amount Of Stock In Process
3000000

2000000

1000000

0
1 2 3 4 5

Interpretation
The above graph shows that working progress at cost. In 2014 the stock in process is
Rs. 18,65,965 and it is increased Rs. 26,97,037, Rs. 37,31,149 and Rs. 65,50,940 respectively
in the year 2015, 2016 and 2017. Then it decreased Rs. 34,44,733 year of 2018.

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4.5 TABLE SHOWING AMOUNT OF FINISHED GOODS

Financial Year Amount Of Finished Goods

2014 43,30,264

2015 36,80,328

2016 32,83,532

2017 69,94,955

2018 68,71,417

Amount of finished goods


8000000

7000000

6000000

5000000
Amount Of Finished
4000000 Goods

3000000

2000000

1000000

0
1 2 3 4 5

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Interpretation
The above graph shows the amount of finished goods at cost. In 2014 the cost of
material is Rs. 43,30,264. It is decreased in the year 2015-2016 the cost of goods is
Rs.36,80,328 – Rs.32,83,532 respectively. Then it is increased in the year 2017- 2018 the
cost of goods is Rs.69,94,955 and Rs. 68,71,417.

4.6 TABLE SHOWING AMOUNT OF STORES AND SPARES

Financial Year Amount Of Stores And Spares

2014 2,19,727

2015 3,38,095

2016 4,63,030

2017 4,02,942

2018 4,23,026

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Amount of stores and spares
500000
450000
400000
350000
300000
250000 Amount Of Stores And Spares
200000
150000
100000
50000
0
1 2 3 4 5

Interpretation
The above graph shows the amount of stores and spares at cost. In 2014 the stores and
spares is Rs.2,19,727 and it is increased in the years of 2015 and 2016, Rs.3,38,095 and Rs.
4,63,030. Then it decreased in 2017, Rs.4,02,942 and again increased in 2018, Rs.4,23,026.

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COMPRESSED TRADING AND PROFIT & LOSS ACCOUNT
FOR THE YEARS 2014 – 18

2014 2015 2016 2017 2018


INCOME
sales 3,49,50622 4,61,67,273 4,98,87,441 3,95,19,890 3,63,28,086
Other income 12,072 20,729 3,94,732 2,92,559 58,668
TOTAL 3,49,62,694 4,61,88,002 5,02,82,173 3,98,12,449 3,63,86,754
EXPENDITURE
Material cosumed 96,58,699 1,16,48,312 1,47,29,942 1,07,15,031 91,83,347
Increase/descrease in (13,51,828) (3,84,176) (24,22,996) (6,05,215) 5,36,707
stock
Employee remuneration 77,57,591 2,65,62,094 2,62,49,290 2,39,09,624 2,44,65,539
&benefits
Finance charges 96,231 66,877 25,106 14,594 17,465
depreciation 1,59,061 3,74,674 2,87,589 2,29,227 1,88,144
Manufacturing expenses 1,66,87,893 46,00,109 71,92,978 48,06,206 34,95,206
Selling expenses 99,678 6,66,151 2,55,497 2,29,986 1,71,425
Administrative expenses - 9,15,995 7,28,774 5,34,154 3,91,184
Other expenses 13,63,639 7,56,957 3,45,440 1,38,356 1,73,374
TOTAL 3,44,70,964 4,52,06,993 4,73,91,620 3,99,71,963 3,86,22,390
PROFIT/LOSS 4,91,730 9,81,009 28,90,553 (1,59,514) (22,35,636)
Less: provision for tax 2,83,970 6,46,513 9,89,719 - -
Profit/loss after tax 2,07,760 3,34,496 19,00,834 (1,59,514) (22,35,636)

47
Chapter 5

Findings , suggestion and conclusions

48
FINDINGS

 The compny is having good sales for their products during all the years of the study.

 The stock turnover ratio (STR) is an increasing trend year after year in the period of

the study. It indicates efficiency of management in turning of their inventory into

sales.

 From the analysis it is found that the inventory conversion period for the year 2018 is

1.22.

 The highest amount of raw material is maintained in the year 2015 Rs.93,26,838 and

then it reaches Rs.48,24,638 in year of 2017 then, it increase in 2018 Rs. 9156507.

 The amount of stock in process in the company represent first four years are

increasing process but the last one year of 2018 is decreased.

 The amount of finished goods in the year 2014 Rs.43,30,264. Then it decreases in

next two years 2015-16 Rs. 36,80,328 and Rs.32,83,532 then it increase 2017 Rs.

6994955 in this are the highest amount in finished goods.

 The company maintain proper stores and spares.

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 Inventories are valued at average cost or net realizable value whichever is lower

 Cost of raw materials, process chemicals, packing materials, trading and other

products are determined on FIFO basis.

50
SUGGESTIONS

 The company should adopt sophisticated techniques to manage its inventory in a


better manner.

 The company should follows just in time technique their by it can do away with
waiting time for a receipt of materials.

 Provide more advertisement through printed and visual medias.

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CONCLUSIONS

The project work entitled “A study on effectiveness of inventory management


and control of Janatha tile works ltd,” it was undertaken for a period of 27 days. The data
collected for this study by using the annual reports maintained by the company for the past
5 years.

From this study it is conclude that the company is successfully manage and
control adequate level of inventory. Stock turnover ratio is in an increasing trend year after
year in the period of study. So it reveals that the company have an efficient inventory
management.

From the management point of view it is better to adopt more sophisticated


technique to manage its inventory for the smooth running of the organization.

52
Bibliograghy

53
BOOKS

 Working capital management, Calicut university central co operative stores ltd.

 Finance management, Calicut university central co operative stores ltd.

WEBSITES

 https://en.m Wikipedia.org>wiki>

 www.management study guide.com

 www.livestopedia.com>terms>

 www.kerala tileindusty.com

 www.claytile.com

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